Bull s
JK Holdings
Quarterly Report

April,2018
CONTENTSInternational

P150No.

The overview of Financial Results for JK
Holdings for the third quarter“The 39th Japan Kenzai Fair” Ending to agreat success
P2 Prospect of Business Condition for AprilJune
P3 Market Outlook of Plywood
Expansion of overseas business
P4 JK Wooden Structure-Lignification Group
NEWSThe overview of Financial
Results for JK Holdings forthe third quarter of the Fiscal Keiichiro Aoki
year Ending March, 2018

President
JK holdings Co.,Ltd.

The cumulative number of new housing starts fromthe first quarter to the third quarter came to 741,300units（decreased by 1.3% from the same period of
the previous year）, and the number of new housing
starts for owner-occupied house, our main markets
also decreased to 221,200 units（decreased by 3.3%）.
Regarding with plywood of our main products,
imported plywood is still short in supply due to fellingtax increase and environmental regulation in thecountries of origin, causing the continuous anticipationof rising prices. Consequently, the plywood market isshifting to Japanese softwood plywood. As a results ofthe sluggish business environment, we have enhanced
sales of lumber and pre-cut in the basic materials
sector, and have tackled expansion of sales andstrengthen sales and improving profits in the sector ofJ-GREEN（Regal Wood Material）which is our private
brands.

Event“The 39th Japan Kenzai Fair”
Ending to a great success
Biannual“Japan Kenzai Fair”heldat Tokyo Big Sight is Japan’slargest general home building
materials exhibition and spot thesale show, which more than 200
major vendor manufactures ofJapan Kenzai participate.
The event achieves popularity asa place to see new products, top
selling items, and latest trends ofthe industry.
The fair in March 2018 with thetheme of“Way of Living and Wayof Life – Road to 2020 –”showedsurvived houses through a heavy
earthquake in japan in the past
to explain the durability from theviewpoints of design and structure,
which gained a good reputation.
The number of visitors was 24,000
and the sales exceeded 54 billion
yen, a great success.

Concerning the building materials and housing
equipment, we have undertakes functional
enhancement of the engineering business to promotesales and improve profitability.
As a result, the consolidated financial settlement for
the third quarter showed net sales of 260.393 billion
yen（2.1% increase compared to the same period of
the previous year）, operating profit of 4.449 billion
yen（23.5% increase）, ordinary income of 4.447 billion
yen（ 25.4 % increase）, and the net income for thequarter was 2.642 billion yen（16.5% increase）that are
attributable to the parent company shareholders.
Our annual targets for the fiscal year shows net salesof 35.0 billion yen, operating profit of 5.0 billion yen,ordinary income of 4.6 billion yen, and current net
income of 2.8 billion yen that are attributable to theparent company shareholders.

2Bulls International No.50

SurveyProspect of BusinessCondition forApril-June<Demand Forecast byBuilders and Distributors>
Demand forecast for April-June,2018 were made by builders anddistributors. According to theresults, builder’s demand forecast
decreased from – 6.1 points in theprevious survey（January-March）
to – 9.1% points and distributors doa drop of 4.0 points, showing thatthe momentum of housing starts
has showed down in general.
Analyzing the results by area,
those which expect“The demandincrease”are three including
Kinki, Chugoku and Kyusyu areas
among builders, and four including
Demand Forecast by Builders420-2-4-6-8-10

the Kinki, Chugoku, Kyusyu andShikoku areas among distibutors.
They are mostly in the westernpart of Japan.
On the other hand, most of thebuilders and distributors inthe area of the Tohoku, Kanto,
Koshinetsu, Hokuriku and Chubu
expect“It will decrease”.
The situations of western Japanand Eastern Japan are different
from each other.

expected to change the situation of
the second-hand housing market.

<Sales Forecast byMain Manufacturers>

According to the figures by theMinistry of Land, Infrastructure,
Transport and Tourism, total
housing starts in Jan – Dec 2017
were 964,641 units（99.7% of thosein the previous year）. Those ofowners occupied housed was 29.5%
which, on the calendar basis, went
below the 30% mark for the firsttime in nine years.
Continuing the subsidizing
projects from the previous year,
the ministry, in the 2018 budget,
puts emphasison the policy:“Revitalization ofthe housing marketby improving
the quality ofexisting houses
and promoting
the distribution ofthem”.
In April,
distribution of“Anshin R houses”
will start, which isAccording to main manufacturers,
only those housing equipment
manufacturers, answered the sales“increase”more than“decrease”.
In manufactures of plywood andceramics, insulation, the numberof answer with“the sales willincrease”were almost the same
with“the sales will decrease”
while 50% of wooden building
material makers predicted“thesales will decrease”.
The construction work on site
appears to be delayed because of
winter season.

<Current States ofRemodeling Business>

Nearly 50%（46.8%）of the inquiredbuilders answered“more than
50% of their works is remodelingconstruction”.
The most effective factor to getorders is“the government’ssubsidized project”more than“advertisements and events”.
From now on, Builders isnecessary and important to deal
with inspection（condition of thehouses）of the subsidized projects.
The forecast（for Apr–Jan, 2018）is the totaled results of the data
gathered from 3,000 client companies
in Japan through interviews which took placefrom late-January to mid–February in 2018.

Point 0 = business result in April-June, 1992

Demand Forecast by Distributors

Dealing volume of Lumber

6420-2-4-6-8-10

Point 0 = business result in April-June, 1992

Point 100 = all responses expect increase

International No.50

Trend
Market Outlookof Plywood<Trend of Domestic Plywood>
Domestic softwood Plywood
production in January 2018, was245,400 cubic meter（Increase
7.8% from the same month in theprevious year）, while shipments
were 252,200 cubic meters. The
stock was 98,400 cubic meters,
falling below 100,000 cubic meters
for the first time in eight months.
Demands on direct distribution
route has been robust. Heavy snowin eastern Japan and shortage oftrucks for transportation in theyears end and new year period
affected the market and there has
been a sense of shortage.
The movement of products isslowing down from late February,especially on general distribution
route, so the new prices announced
by a manufacturer in March
are likely to be accepted. Precut
factories plan to start purchasingmaterial from the end of March for
products to be processed in April.
In Kyusyu area, regardless of thelevel pf new housing start figure,the move to strengthen purchasingof plywood was seen.
As manufacturers have beenworking on developing a wider
range of production of domestic
softwood plywood, they are
becoming more and more able toadjust supply to the market.

CompanyThe JK Group has establishedbases for selling home building
materials in eleven areas in sevencountries, aiming for providing
high quality building materials thatare friendly to the environmentand human. We opened offices
in Moscow（Russia）, Jakarta（Indonesia）and Taipei（Taiwan）
in 2017, to promote our business
into the local markets.
The annual sales volume of theoverseas business as a whole isabout 1.2 billion yen. The Major
one is the sales of MDF for
the U.S. market. We have also
started selling siding in Russia
and business of interior work forapartments in China. And we havedecided to advance to Singapore tostart our business in Southeast andSouthwest Asia in the future.

<Trend of imported plywood>
Imported plywood arrivals inJanuary 2018 were 273,000 cubic
meters（decreased 11.2% year onyear）looking at the amount ofarrivals based on country, 103,500
cubic meters were from Malaysia（decreased 1.0% year on year）
and 63,600 cubic meters were fromChina（Decreased 7.9% year onyear）. Although port inventories
around the country temporary
increased, shortage of productsthat were in short supply has not
resolved, because not all items
arrived.
As the supply of logs decreased,Bulls

the import of imported plywood
decreased, leading to a change inthe market. There was a shift tousing domestic lumber for floor
base. The import cost increases
every time products are newly
received, and those involved in thedistribution are torn between“bullish upstream” and“downstream that has priority onprices” and are forced to handle
the tough situation. As for thefuture arrival, as the yen is
showing a weakening tendency,
there is a possibility that trading
companies that are concerned
about the negative spread may
refrain from purchasing products.

Wholesalers' Prices of Plywood in Tokyo

Expansion of overseas businessyen/sheet3

4Bulls International No.50

Company
JK Wooden StructureLignification GroupNEWS（JK TimberEngineering Group）
KEYTEC Co.,Ltd. a subsidiarycompany of JK Holdings Co., Ltd.
has announced that will build a
new factory for domestic plywoodin Yamanashi Prefecture. Thecompany has long been using theprefecture’s larch as the materialfor LVL（Laminated VeneerLumber）and softwood plywood.
In addition to the connection,
the place is close to the Tokyo
metropolitan area, which is anotherreason for the advance. On theback of the construction of thenew factory, there are problems ofimported plywood caused by
the regulations for deforestation

TopicsWorking towards theDevelopment of Japanese
Wood Resources Utilization

Japan is a lushly green country
with 25 million hectares of forests
accounting for about 70% of thecountry’s land. Among the forest
land, 13.4 million hectares arenatural forests accounting forabout 60%, and 10.0 million hectares
are planted forests accounting
for about 40%. Within the 4.9%
billion cubic meters of total
forests accumulation, 3.0 billion
cubic meters are planted forests
accounting for about 60%.

and the markets trend to shiftmaterials of products to Japanesewood.
The LVL current production
volume of KEYTEC Co.,Ltd. isabout 5,000 cubic meters. The newfactory’s sales target is 6,000 cubic
meters of domestic plywood. Afterthe completion of the new factory,
the sales volume is expected to
be about 15,000 cubic meters permonth.
Supported by JK Holdings, thePHOENIX Wood & Plywood
Museum（a public interestincorporated foundation）has
become popular as a museumthat introduces the benefits ofwood and plywood to the generalpublic ranging from children to
adults, and in 2017, the number ofvisitors exceeded 100,000 people.
Though woodworking classes
for the general public and forwood craftsmen, the interest inwood has risen for many people,
and through various educational
programs such as scholarships andresearch grants, effort and support
are also being put into the human

左から キーテック中西社長、JKHD 青木社長、後藤斉山梨県知事、望月幹也身延町長

resources that will support thelumber and plywood industry andhousing industry in the future.
By supporting the wood &plywood museum, JK Holdings
is working to contribute to thedevelopment for utilization of wood
resources in Japan.

Planted Forest Area by Age

In response to the recent trend
to switch to domestic lumber,
Japanese lumber self-sufficiency
rate has increased to 35%（As of2016, Forestry Agency）expanding
about 200% in the past ten years.
However, in order for the selfsufficiency rate to rise further inthe future, the utilization of lumber
the planted forests, which havematurated and reached the harvest
period, are necessary.

Wood Land Tower 1-7-22 Shinkiba Koto-ku,Tokyo 136-8405 Japan
Phone +81-3-5534-3800 Fax +81-3-5534-3833
E-mail kouhou@jkhd.co.jp
URL http://www.jkhd.co.jp
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